It’s not a “fast lane” but Comcast built a CDN to charge for video delivery

Comcast's last mile video delivery service brings in cash from broadcasters.

Comcast is now competing against content delivery networks (CDNs) such as Akamai with a new service that can improve delivery of video to Comcast subscribers in exchange for payment.

"This new offering allows content owners to go directly to the ISP and have their content stored and delivered via the last mile, thereby displacing some traffic currently delivered by third-party CDNs like Akamai and Limelight Networks," well-connected industry analyst Dan Rayburn reported today. "While this is the same type of CDN service that other commercial CDNs like Akamai already offer, Comcast can offer a very good SLA since they are a last mile provider."

Further Reading

When Netflix and Comcast customers both pay Comcast, the traffic flows smoothly.

Comcast didn't issue an announcement and hasn't responded to a request for comment from Ars. The Information reported that "John Schanz, Comcast’s chief network officer, said in an interview that the offering is currently being tested with some customers and is expected to roll out broadly if all goes well." The service will let Web content companies "bypass network middlemen and deliver their services directly to Comcast Internet customers," The Information article said.

The service is already live and has a few paying customers delivering content on Comcast's CDN, Rayburn reported. "Right now, Comcast’s CDN service is primarily targeting large and mid-sized content owners for large file downloads and streaming of video, both live and on demand," he wrote. "While Comcast can also deliver content for smaller content owners, it does not make sense for the majority of small content owners to go direct to an ISP for content delivery. Comcast isn’t offering what the CDN industry calls value add services, so CDNs like Akamai that get a large percentage of their revenue from services like dynamic site acceleration won’t see that portion of their business affected."

The service is being deployed at a time when the Federal Communications Commission is debating whether net neutrality rules should allow Internet "fast lanes," in which Web services pay Internet service providers for a faster path to consumers. Comcast argues that it is allowed to offer fast lanes, also known as "paid prioritization," despite making net neutrality agreements when it acquired NBCUniversal.

Despite making that argument, Comcast has said it doesn't intend to offer fast lanes. And the new CDN service is not a fast lane, Rayburn told Ars in a phone interview.

"There's no guaranteed prioritization of any kind," Rayburn said. "This is simply a content delivery offering just like an Akamai or someone else sells, but the difference here is the company offering the service owns the network."

Video providers typically pay third-party CDNs to ensure that traffic is delivered along the most optimal route to each consumer and that heavily accessed content is cached for quick retrieval. CDNs themselves often pay ISPs for direct access to their networks. When Netflix built its own CDN, it tried to get free connections to ISP networks. While Netflix succeeded in some cases, it was forced to pay both Verizon and Comcast.

While no specific Comcast CDN customers were revealed, TV broadcasters who also deliver streaming video over the Internet are likely suspects. "Their ideal customers for the new service would be broadcasters, gaming companies, software companies, large publishers, and those in the media and entertainment vertical," Rayburn wrote.

Rayburn said businesses could save 20 to 40 percent a year by paying Comcast instead of a third-party CDN. For instance, if a customer is spending $1 million a year on CDNs and sends 30 percent of its traffic to Comcast, that could end up being about a $100,000 savings per year, he said.

"Let's say that you're a broadcaster. You're not big enough to build out your own CDN, you're not a Netflix, you're not a Google, so you're going not going to build out your own CDN. You're going to use third-party commercial CDNs," he told Ars. If 30 percent of a video provider's content is going to Comcast customers, "you could take that 30 percent of your traffic, you could have Comcast deliver it for you and you could pay a much cheaper price because Comcast owns the network and it's wholesale, so they're selling it at a discounted rate compared to a CDN like Akamai or someone else who doesn't actually own the network."

"There's no question that the ISP should be able to give you a better SLA [service level agreement] because they own the network. But a better SLA doesn't guarantee you QOS [quality of service]. Those are two different things," Rayburn said. "If you're a third-party CDN you can't guarantee that the network will be up 100 percent of the time because you don't own or operate the network, whereas an ISP could guarantee you something like 100 percent network uptime because they're the ones who actually own it, they might feel confident enough in saying, 'yeah we could offer that.'"

Comcast's long game

Comcast is unique among US ISPs in that it offers a commercial CDN directly to content owners without licensing a platform from a third party, Rayburn wrote, noting that AT&T resells Akamai services. Verizon struck a deal with HBO to deliver content inside the last mile for FiOS subscribers in 2010, but its CDN plans stalled temporarily. Verizon is expected to get back in the market due to its recent acquisition of EdgeCast.

"No small content owner builds their own CDN, so small content owners don’t need to go direct to any ISP for CDN services or interconnect deals," he wrote. "Small content owners will always use third-party commercial CDNs as it’s cheap and they can get good quality delivery from a single provider. That’s why the only companies doing interconnect deals are content owners like Microsoft, Google, Netflix, Apple, Yahoo! etc. because they have built their own CDNs. The reason Comcast is doing this is to open up another avenue for any size of content owner to deliver content."

Some network neutrality proponents have asked the FCC to examine interconnection deals as part of the Comcast/Time Warner Cable merger review. Comcast's CDN service could be another item on the list of things merger observers want the FCC to examine.

"Like with all these issues, the question is whether Comcast is abusing its market power and charging other networks for access to its customers," Public Knowledge Senior Staff Attorney John Bergmayer told Ars. "If it is, it doesn't matter whether the interconnection is called a 'CDN,' 'peering,' 'transit,' or whatever. There's nothing inherently wrong with an ISP running its own CDN, but with Comcast it's all about the long game."

Promoted Comments

In theory I would have no issues with this as long as the ISP didn't treat their own CDN better than other CDNs, but this is Comcast. You know they're going to subsidize costs from their customers to strong arm competition for this "competing" service.

If this Comcast CDN service was an entirely separate company with its own accounting and got no money from the parent company while being strongly audited and made sure not to get preferential treatment from the parent company, I would have little issue.